It bewilders me when I hear comments from certain people in our industry who say, “contractors can’t afford to operate showrooms.” Hogwash. I have always considered my showroom facility a tool that is necessary to get the job done profitably and professionally. When this tool is utilized properly, it is well worth the effort and investment, and enhances the professional image we all strive to convey.

I’ve had a showroom ever since 1962, when I was a young plumber doing new construction work. Specified materials tended not to be the best back then, so my showroom was used primarily to upgrade plumbing and heating in the new homes and other buildings for which we contracted. Our builders were open to the idea as long as they didn’t have to get involved. Homeowners were invited to the showroom to view what was specified for their new homes, and what they could get for a few dollars more. The additional profit that showroom generated was a nice plus for a young plumber doing battle in the highly competitive new housing market.

That was a modest venture. Now I have a subsidiary geared entirely to the kitchen & bath remodeling business, complete with a showroom that many people have told me ranks among the biggest and best operated by any PHC contractor in the country. It is located in the very conservative city of Milwaukee, Wis. Why is that worth noting? Because there is a misconception shared by too many contractors that the fancy kitchen and bath remodeling market is only for the hoi polloi who live in places like Beverly Hills. Middle America likes living in comfort too, and they also like to invest in things that increase property value.

My showroom facility measures 6,300 sq. ft. and carries displays of all the merchandise needed for a full-fledged kitchen and/or bath remodeling job, not only plumbing but also cabinetry, trim, tile, wallpaper, etc. This is important. A bath showroom that displays plumbing products only will have a hard time competing against people who offer one-stop bathroom remodeling services.

The facility is headed by my very capable son. Tom, our vice president/remodeling who is a civil engineer and master plumber. It also is staffed by a manager, assistant manager, three salespeople and five kitchen and bath designers.

It is a successful operation that achieves a high gross profit of between 65-70{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} on sales. This may seem extraordinarily high to the person who is not familiar with this type of market activity. But a profit goal such as this is necessary in order to deliver the consumer what you and he bargained for in the most efficient and professional manner possible.

After the cost of doing business (overhead) is satisfied, we end up with net profit before taxes in the area of 15-20{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} of sales. Comparing this with the national average for PHC contractors of 2.7{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} before taxes, I personally believe this borders on outstanding.

I offer this by way of background to introduce this two-part article on the kitchen and bath remodeling and merchandising business. I’m happy to share experiences that go back 26 years as a showroom operator, and 28 as a PHC contractor.

When I first started, I was dead set against having a display facility. This was an era when new homes and other construction were booming in Milwaukee and other parts of the country, and I was doing plenty of it. I didn’t feel I needed to get involved with anything else – and besides, I thought I couldn’t afford it. Boy, was I wrong.

The Basics: Full-scale remodeling is not for everyone. To produce the type of figures I just cited, a contractor has to plunge into it as a business entity unto itself, a profit center allied to but separate from either a new construction or service-repair-replacement PHC business. It cannot be a sideline activity, as is the case in far too many remodeling efforts I observe. The level of profitability simply will not be there.

If you decide to take the plunge, try to adhere to some of the basic guidelines which follow.

Most important, you must have an attractive showroom, and in a good location. The facility should be in a high-traffic, easily accessible location – including parking space for consumers. It can be attached to your existing shop, as long as the premises are attractive, well located and meticulously maintained. The Blau Bath & Kitchen Showroom is located apart from our service center and corporate headquarters. This works well for us, and probably would be advisable for most PHC contractors.

Every time someone in our industry takes a survey asking plumbing contractors whether or operate a showroom over half typically answer “yes.” Upon closer inspection, what most of them really have are a few fixtures and faucets arranged helter-skelter in a tiny retail area connected to their shop. The shop and store often are located in areas of town well off the beaten retail path.

Dispense with this mode of thinking. The kind of showroom under discussion here bears as much resemblance to the typical plumber’s “showroom” as St. Patrick’s Cathedral does to a storefront church!

I suggest a minimum of about 1,800 sq. ft. of floor space for a bath showroom. Less than this will restrict you too much in displaying the variety of product necessary to whet consumer appetites and provide a range of selection. Remember, your aim is to sell top-of-the-line products the customer generally does not have an opportunity to view elsewhere. The customer who desires glamorous products – and most do – wants and deserves reasonable variety.

A showroom featuring only the low to medium grades of merchandise is not worth the effort. Luxury merchandise creates an atmosphere that instills confidence in both consumers and your salespeople. It sets you apart from everyone else.

Staffing: If you have a deluxe showroom, you must entrust it to employees who know how to squeeze every last dollar from it. This means it is necessary to have at least one highly qualified kitchen and bath designer-salesperson on your payroll.

Since you and your present employees already know what is needed in the way of mechanical installation, you might want to consider giving one or more of them an opportunity to progress in this area. Of course, they will need much more training beyond their mechanical expertise.

The best source of design education that I know of is the National Kitchen & Bath Association (NKBA). Their educative seminars are excellent, with instructors who are active owners of successful kitchen and bath enterprises. Member teaching member –  there’s no better way.

For information about NKBA design courses, contact them at: 687 Willow Grove Street, Hackettstown, NJ 07840. Telephone: (800) THE-NKBA (843-6522).

I’d also like to tell you about a program we started that has brought us top-notch design talent. Each year the Blau Bath & Kitchen Showroom sponsors a scholarship competition for full-time design students in Wisconsin, with prizes of $1500, $750 and $500 for the top three. Judges come from members of the American Society of Interior Designers and our staff.

The criteria was to develop two rooms of a typical mom-pop motel into a weekend “love suite” with whirlpool bath for two, bidet, designer faucets, etc. This year, students will be asked to design a combination kitchen and family “great room,” using my 128-year-old Fieldstone home as the basis for what I’m sure will be something dramatic.

It’s amazing what happens! The award-winning entries are displayed at state conferences around Wisconsin and whet peoples’ appetites for amenities in both existing buildings and new construction. I love helping out ambitious kids, but also confess to a more selfish motive.

Our annual sponsorship of this competition gives us exclusive access to fresh, innovative talent each year. Our senior designer is a first-place winner from two years ago, and I consider her to be one of the most talented in the Milwaukee areas. Presently, a young student attending one of the interior design schools in the area is employed part-time in a co-op program with us.

It pays to get ‘em young!

Sweet Dreams: Next, displays must be considered. Although they are more expensive to create, I use full-room settings. This way customers can more easily visualize their finished bathroom or kitchen. Bathrooms on display start with luxurious 5’ x 7’ models on up to a spacious health and “love” suite. Your salesperson doesn’t have to say a word. Prospects automatically being picturing a dream bath or kitchen in their own home.

Each bathroom is fully plumbed and wired. Toilets flush, lav faucets emit water and whirlpool tubs whirl. The customer can try them out, and stick in a hand to feel the therapeutic value of swirling water. In fact, we invite anyone who wishes, to don swim suits and get inside before they buy. By creating customer involvement, we are transformed from sellers of products to providers of comfort and benefits. It’s almost like giving free candy samples to kids!

Manufacturer-supplied vignettes are an alternative to fully operational displays, as well as free-standing and wall arrangements. Though less expensive, I feel they are less effective. I wouldn’t deem them totally useless, but be aware that each compromise made affects the high profit goals we need to set for ourselves.

Featured Lines: Deciding what brand names to display is a very touchy subject for me. I feel strongly that we can only be profitable merchandising the products of manufacturers and wholesalers who honor traditional distribution policies. We cannot achieve proper gross margins and maintain enthusiasm when major product lines are sold by competing wholesalers who sell at retail prices slightly higher than our costs, and in some cases below. There is a discount center directly across the street from the Blau Bath & Kitchen Showroom, and we cannot show the same products displayed there.

Of course, we will sell customers virtually any product they desire, whether we display it or not. Above all other considerations, the customer is always right, and we aim to please. More often than not, however, they follow the recommendation of our professional designers for the products we display.

With kitchen cabinetry and related products we are in a much better position. Presently, we buy the products of six manufacturers through various distributors. If any of these line appear at discount building supply centers, we no longer will market the product.

The best way to become knowledgeable about product lines is to attend the state and national trade shows. The top two must expositions are the annual PHCP Expo co-sponsored by NAPHCC and the American Supply Association, and the annual NKBA show. I am proud to be a member of both of these fine organizations.

The Tally: So what is all of this going to cost? From my experience, I have learned that the minimum 1,800 sq. ft. showroom, utilizing full-room, operational displays, costs approximately $165,000 to complete. Also, it is wise – in fact, necessary – to budget an additional $40,000 for updating the displays each year.

These figures take into consideration that manufacturers and wholesalers have helped us out with materials. For example, by working closely with a very progressive wholesaler that we do business with, most of the feature fixtures in all of the bathrooms were not paid until one year after we officially opened our showroom. I appreciate his help, but I don’t feel that I was begging. Both of us had something to gain by moving the products he carried.

There may be wholesalers in your area who are just as wise. Seek them out if you are planning a showroom.

As for the kitchen sector of our business, that is handled in a separate showroom in the lower level of our facility, while our bath showroom occupies the main floor. I recommend a separate arrangement. The kitchen section can be a little smaller, a minimum size of about 1,500 sq. ft. However, the cost of building and maintaining it will be approximately the same as the bath area.

Since my background is in plumbing, I feel I have an edge over most kitchen and bath remodelers in selling bathroom work. Yet, I don’t concede any edge to kitchen dealers in their specialty.

Generally speaking, we find that kitchen work is more competitive than baths, but also find some distinct advantages. It is less direct labor intensive, owing to a higher material cost factor than bath work. Bathrooms needn’t be that way if one keeps the mind focused on selling high-end products. We like both.

The Business of Remodeling: We’re coming to the end of this week’s entry, and skipped over some key topics of advertising, sales, and scheduling. These will form the basis of the next article.

Meanwhile, I’d like to leave you by referring to the sample chart of accounts for a showroom operation attached. It is patterned after the one we use at Blau Bath & Kitchen Showroom and may assist you in designing your own showroom.

I offer it as a reminder that you have to tend to business more than anything else. You can have the finest showroom in the world and best sales staff, but still go broke if you don’t understand numbers and crunching and the basic financial fundamentals of operating a business – mark-up, overhead, budgeting, etc.

Part I The Bath & Kitchen Business